CEFS TOPICS 2 AND 3

Personal Life Cycle

The course of a person's life from birth to death.

Life Stage

An age-based phase within the personal life cycle, such as childhood or young adulthood.

Life Event

A particular occurrence that can change income, spending, responsibilities, and financial priorities, such as starting work or retiring.

Income

Money received from various sources, including wages, benefits, or pensions.

Outgoings

Expenditures, including spending, debt repayments, and savings allocations.

Dependant

A person who relies on another for support, such as food and housing.

Need

Something essential for survival, like food, clothing, and shelter.

Want

Something optional and desirable, such as entertainment or luxury items.

Aspiration

A hope or goal for the future, such as obtaining a qualification or traveling.

Risk Averse

Reluctant to take risks; values reducing uncertainty or potential loss highly.

Risk Tolerant

Willing to take more risks, potentially in pursuit of greater benefits.

Direct Debit Guarantee

A protection ensuring that if an error occurs in a direct debit transaction, the payer is entitled to a full refund.

Faster Payments

A system for fast money transfers between UK accounts, typically processed almost immediately.

CHAPS

Clearing House Automated Payment System, used for high-value, time-critical payments.

Cash Card

A card used to access cash from an account, not for making purchases.

Debit Card

A card that allows for both cash withdrawals and purchases, charging directly to the linked account.

Prepaid Card

A card that holds value loaded in advance and is used until that balance is spent.

Cash vs Electronic Payments

Cash is immediate and helps budgeting, while electronic payments offer convenience but can involve identity theft risk.

Cheque Clearing

The process by which a bank transfers payment between accounts after a cheque is deposited.

Importance of Life Cycle in Financial Planning

Anticipating changes in income, expenditures, and responsibilities supports better financial preparedness.

Typical Age Range for Young Adult

18 to 25 years.

Typical Age Range for Old Age

65 years and onwards.

Life Assurance

A policy providing money for dependants or mortgage repayment upon the insured person's death.

Location Influence

Where someone lives affects education, employment, living costs, and access to services.

Higher Education Financial Influence

Involves potential costs, borrowing, and affects future earning opportunities.

Retirement Income Components

May include state pensions, workplace pensions, savings, and part-time earnings.

Impact of Poor Health on Finances

Can reduce earning capacity and increase healthcare expenditures.

Social Status

The roles or position people have in society, influencing responsibilities and economic circumstances.

Lifelong Learning

Continuing to develop knowledge and skills beyond initial education.

Electronic Payments Security Factors

While secure, electronic payments can still be susceptible to fraud and errors.

Advantages of Cash

Immediate payment and budgeting visibility.

Disadvantages of Cash

Risk of loss or theft and generally not suitable for remote payments.